- Not-for-profit hospital giant Mayo Clinic reported profit of $493 million in the second quarter of the year, an 172% increase from the same quarter last year spurred by strong returns on investments and growing volume.
- The Rochester, Minnesota-based health system had revenue of $3.4 billion in the second quarter of the year, up almost 10% year-over-year due to growth in several markets, including Rochester, Phoenix and Jacksonville. Labor expenses totaling $3.8 billion accounted for over 60% of Mayo's operating expenses, which climbed 5.3% over the same quarter last year.
- Operating income was $300 million for the three months ended June 30. That's an almost 90% increase year-over-year, partially as Mayo had higher-than-normal expenses in the quarter last year to due an Epic EHR implementation.
Roughly $3.43 billion in second quarter operating revenue pushed Mayo to the $300 million operating income. Medical service revenue paid out for providing patient care range in at $2.89 billion in the quarter, represented 84% of total revenue.
On a consolidated basis, hospital admissions increased almost 4% and surgical patients increased almost 6% compared to the same quarter last year, though Mayo declined to provide specific figures. Payer mix remained stable year over year, with contracts accounting for roughly 59% or $3.3 billion of second quarter reimbursement, Medicare accounting for 24% or $1.4 billion, self-pay and commercial for 14% or $756 million and Medicaid for 3% or $189 million.
Mayo's more than 70 locations across Arizona, Florida, Iowa, Minnesota and Wisconsin employ over 65,000 employees and receive consistent accolades for quality of care.
Second quarter results trickling in from U.S. nonprofit providers have been largely positive. Oakland, California-based Kaiser Permanente saw its revenue more than triple year over year, hitting $2 billion. Though S&P Global analysts expect the nonprofit sector to remain relatively stable this year, nonprofits face regulatory, public relations and labor headwinds.
Nonprofit providers are facing increased scrutiny over their status as tax-exempt entities. Long-time critic Sen. Chuck Grassley, the Republican chairman of the Senate Finance Committee, has revived his oversight of whether health systems are living up to their obligations in exchange for nonprofit status.
Earlier this year, Pennsylvania system UPMC was also in hot water with state attorney general Josh Shapiro for refusing to contract with competitor Highmark. The saga reached a conclusion late June when the two signed a contract allowing access to UPMC facilities by Highmark-insured patients. Shapiro had accused UPMC of corporate greed and failing to live up to charitable obligations.
Though Mayo is a nonprofit, it files financial reports with the Municipal Securities Rulemaking Board when municipal bonds are sold to finance economic development projects.
Currently, the provider expects to shell out $1.2 billion on various construction projects over the next three to five years, including a $233 million cancer facility in Jacksonville, Florida, scheduled for completion in 2023.
However, Mayo announced it would be closing a longtime care clinic in La Crescent, Minnesota in November. The planned closure is the latest in a string of decisions to end or pare down on services at Mayo's smaller locations, focusing instead on beefing up its larger campuses.